Lessons learned from the book Startup Boards by Brad Feld and Mahendra Ramsinghani
I just finished Startup Boards by Brad Feld and Mahendra Ramsinghani. And so this week I am focused on how startups can better run their boards. I mentioned in a previous post that one of the great benefits of Techstars for founders is building structured accountability into a startup. The things we teach at Techstars are simple, although hard in practice: how to manage feedback and being hyper-vigilant in metric tracking and addressing warning signs earlier rather than later. It is, after all, the details that can crash a company, so we tighten everything up early.
Startup Boards follows the same pattern. Feld and Ramsinghani write in great detail about when and how to choose your board members, and how to be most effective with them when you have them.
The authors encourage founders to start a board of directors early. In the seed/series A stages they believe it should consist of two founders, one or two VC investors who require a board seat based on their level of funding, and one independent board member. Hopefully you were very careful in selecting your investors and therefore are excited to have them on your board because they bring a great deal of expertise.
“Someone once said to me that the CEO has the loneliest job in the world. And in many respects, that’s true. However, the board exists to help alleviate that by giving CEOs a sounding board for ideas and a peer group with whom to interact.” — Seth Levine, Managing Director, Foundry Group
While there are so many things I’d love to recap from this book (why you should attract gender diversity on your board, how to manage legal challenges, etc.), I’m going to only focus today on how to run the operations of having a board well to set your board up for success.
- Orient your new board members. Have an orientation folder ready for your new board members with the bios of current board members, observers, committees, and contact information, as well as the board handbook, policies and last minutes, the board meeting schedule, policies and practices, and legal documents.
- Have a board calendar at the beginning of the year for the whole year. Feld and Ramsinghani write that in the first two years when things are always changing, a board should meet monthly, then every six weeks in years three and four, then bimonthly or quarterly after that. Be clear on the details: how long a meeting will last (in the early stages, this could simply be a one hour meeting), how often they will be in-person, and what is expected in terms of expectations on follow-up and responsiveness of your board.
- Set an agenda. The CEO is responsible for setting the meeting agenda. Know the key issues that need to be raised, how you plan to raise important topics, decisions you would like to share, any problems with your executive team, and careful analysis you’ve already done of questions you would like input on from the board. Feld and Ramsinghani lay out in great detail some topics that the CEO might want to focus in on when setting an agenda.
- Send your board packet at least 48 hours in advance. You manage the board the same way your company is managed. If things are messy and last minute, probably the company is too. At Techstars we are always reminding our companies to send weekly updates in program, monthly updates after program. And those updates are not just so we know what’s going on, but so that the CEO can clearly see the metrics, fire alarm bells early if something is off, and get more input on what is going on in the company. When months have gone by with no monthly update, we know something is up.
- Hear from every board member, not just the ones most likely to give their opinions. Your loudest meeting participant is not always the smartest or best equipped to offer an opinion.
- Socialize the board as you would your own team. The board should know each other socially so they can gain alignment more easily and the board can have better conversations in the meeting. Typically a dinner follows in-person board meetings. And, the CEO should get familiar with the dietary needs and travel preferences of your board. Little things like that matter and show you care about the team you’ve built around you.
- Follow up. Sometimes your follow up is all you have to show you are good at what you do. Follow up with board members 24 hours after the meeting with organized action items, a summary of feedback, and the board minutes.
Startup Boards was really educational for what every first-time founder should expect, and pitfalls to avoid when building their first startup board. Like other books by Brad Feld, Startup Communities, Startup Life, he pulls in stories told by numerous venture capitalists, entrepreneurs, and other experts on what has gone right and wrong in their path that we can all learn from. The book also concludes with great checklists for things like how to prepare your board package, what documents should be shared with your board members, how to include your lawyer, and others. I highly recommend for anyone venturing into the complicated, but hopefully fruitful journey of building a board.